Alarms of an economic deceleration in India are increasing after figures published recently which demonstrated that development slackened to its slowest rate in six years. The economy of India grew just five percent year over year from April to June, marking the fifth consecutive quarter of slowdown, as per the data released recently by the country's Central Statistics Office.

Beating anemic economic action is a major obstacle for Prime Minister Narendra Modi's government as it intends to alter India into a $5 trillion economy by 2024 - a feat that will need average annual growth of at least eight percent and that depends greatly on inspiring private investment.

Many indicators hint trouble is infusing in India's economy. The auto industry has allegedly laid off 350,000 workers since April. At the same time iconic biscuits manufacturer Parle has also told about the slowing demand for buys among low-income consumers.

Recently, Indian Finance Minister Nirmala Sitharaman declared a slew of policy measures to stimulate the economy. These included a government spending binge on cars to aid the ailing automobile sector, a promise to accelerate tax refunds to small businesses and a rollback on taxes for the superrich.

"The first step in tackling a downturn is the acknowledgment of it, which we finally received last week from the government," Saurabh Mukherjea, founder and chief investment officer of Marcellus Investment Managers, told Al Jazeera.

"Credit should be given to New Delhi for bringing fiscal remedies to the table, though these will take time to bite," Mukherjea added. "It looks unlikely that we will have an economic recovery this year."

Structural or cyclical?

Amidst a worldwide economic deceleration fuelled by trade hassles between China and the United States, India is among a lot of countries feeling the outcomes of reduced demand.

But not like countries such as Vietnam (according to media reports, it will be the latest home of Google's smartphone production unit), India is "unable to cash in" on the space left by fading demand in the US for Chinese goods and services, says Jayshree Sengupta, Senior Fellow at the Observer Research Foundation.

India's incapability to capitalise on China's disadvantage exposes the structural barriers obstructing its competitiveness. "Compared to some of our neighbours, we have "relatively higher productivity costs, poor infrastructure and low workforce productivity," Sengupta told Al Jazeera.

Representing for around 15 percent of India's economic production, the country's manufacturing sector has not coped to help move the economy away from one that is leaded by agriculture - a distinctive route for raising incomes as nations become industrialised.

Above 40 percent of the workforce is working in the farming sector, stumbling from low prices and blocked exports. That's had a secondary effect on wage growth, which is sluggish, and moreover on demand, which has become muted in a habitually consumption-driven economy.

Ishita Mehrotra, an economist at Ambedkar University, Delhi, also indicates to the disturbance of demonetisation (a failed attempt at removing money earned from illegal activities and hidden from tax authorities) for causing a "liquidity crunch [shortage of hard currency] in a rural economy that is mostly cash-based".

The "contraction of the construction sector, which previously absorbed a lot of rural labourers" is a further influence on an already tight labour market, she added.

Unemployment stays high and a thorn in the side of a government that originally came to power promising huge job creation. When coupled with rising price rises, this means households are placing the brakes on spending.

"In urban areas, people are not saving, but they are not spending either. It's a strange situation," said Sengupta. "This tells you that channels like healthcare and education are a big part of their expenditure- these are the areas where the government needs to invest".

Refreshing consumption demand is a main concern for economic recovery, said the Reserve Bank of India's (RBI) annual report, while the RBI asked banks to reduce more borrowing costs to persuade consumers and businesses to expend.

Cash insertion

With its hands on an extraordinary spend of $24 billion from the RBI's left-over reserves, many expect the government can now distribute a much-needed cash injection that will help revitalize business activity.

The worth of new projects broadcasted between 2018 and 2019 hit a 14-year low, according to the Centre for Monitoring Indian Economy. This shows a short of business confidence. Financial markets have also not improved fully from a liquidity disaster persuaded by last year's fall down of Infrastructure Leasing & Financial Services, a major non-bank lender.

The government has declared a $10 billion re-capitalisation arrangement for public sector banks to increase lending to industry.

But, economists have advised that improving the contribute side does not essentially solve the problem of low business and investor confidence.

With bigger government spending seen as the need of the hour, there are calls to considerably broaden the country's tax base and help refill government coffers without depending on central bank handouts. Now, India's tax revenue is 16 percent short of budget estimates due, according to the Economic Survey 2018-19.

"Instead of [giving] tax incentives to foreign portfolio investors and finding support for the automobile sector, the real issue is providing a demand stimulus," said CP Chandrasekhar from the Centre for Economic Studies and Planning at Jawarharlal Nehru University, in New Delhi. "The government needs to raise spending, and to do this sustainably, it must raise taxation".

The July budget, which came after the verdict Bharatiya Janata Party secured a massive victory in the May 2019 elections, also upset those who anticipated to see bigger clarity on the government's development agenda.

As a consolidation of India's numerous labour laws is ongoing and while there's been global admire for the bankruptcy law initiated in 2016, obstacles - such as land acquisition and the privatisation of state companies that could assist to fuel growth - have yet to be attended.

"The budget spoke a lot about what the government had achieved in its first term, but not so much about what it will do in the next," said Chandrasekhar, adding that the government needs to focus on the economy rather than "diversionary politics" at this time.

Critics have just recommended the recent revocation of Article 370, which has brought media reports of unrest to Indian-administered Kashmir, is a tool to detract attention away from an ailing economy.

"It's not usual to see unemployment levels as high as ours, in countries with a similar demographic structure," Chandrasekhar said. "This should be the priority of the day".